Advantages of the recession

The seventies TV series 'The Waltons' shamelessly romanticised the Great Depression. The family as depicted by the narrator John-Boy was poor but happy. It was the family, their warmth and family unity that mattered. Who wouldn't be nostalgic for these wonderful times? But the schmaltzy portrayal of hard times contained an element of truth - there are really aome advantages of a recession.

A recession provides a dose of reality and perhaps a return to basic values.

The generation of the early twenty-first century is spoilt. Its members are accustomed to getting what they want when they want. Unlimited credit has made it all possible. Parents of young children have forgotten how to say NO.

The ever deepening global recession has changed all that. Cash-strapped parents are being forced to turn down demands for the latest Play Station, Ipod or quad bike. But instead of feeling guilty, these parents can feel good. Their children will manage very well without the latest technological toys and their possesions will acquire value.

Perhaps this will herald a return to traditional outdoor children's games. The transformation of children's play into sedentary activities has been a major cause of low-muscle tone and related perceptual problems. Children thrive when there are limits. For the first time in many years parents are once again learning how to say no. Saying no builds a sense of value.

Endless credit made it possible to get almost anything we wanted. But the novelty of each new purchase soon wore off, replaced by the craving for the next, and the next ....

During the recession times are tough. Each buying decision must be weighed up with care. Our things are beginning to acquire value.

The rampant materialism that has gripped our culture has driven many to taking on a second and even a third job. These were necessary to finance all of the 'necessities' of the age. It was all done for the family. The recession has put an end to the third job, the second job and perhaps the day job. At last there is time to spend with the family.

The recession helps us to discover that not everything worthwhile requires cash! A picnic on the banks of the river with a cool breeze caressing your skin is about as good as it gets. What can be better than sharing a bottle of ice cold Sauvignon Blanc on the beach at sunset? Sometimes the best things in life are free.

Take-out fast food became one of the curses of the age. Obesity has spread like wildfire as millions became overweight. Many have forgotten the pleasure of good home cooked food. One of the greatest benefits of the recession is that we are forced to eat good, wholesome home cooked meals. There is no going back!

Someone once said that a person is rich when he is content with what he has. Perhaps the single greatest advantage of the recession is the return to real values to value what is important, the people that we love and share our lives.

A recession is not on the cards!

Trevor Manual is the South African Minister of Finance. Last week he told the country that recession is not on the cards.

Prominent financial experts around the globe have been telling us that the world's financial condition is at its worst since the Great Depression. Most of this caused by the $800 billion plus losses experienced in the aftermath of the sub-prime crisis.

Can a world-wide recession be averted?

Recession is caused by market sentiment. People make decisions based on their perception of the economic climate. Consumers cut back on consumption. Investors cut back on investment. Producers cut production. All because of expectations of an economic downturn. Having burned their fingers through poor judgement, investors shy away from any investment that involves a perceived risk.

There are some very negative pressures on our economy and on the global economy as a whole. Increasing oil prices from an already highly inflated base. A world food production crisis fueled by a wide-scale agricultural shift to the production of bio energy.

Can these negative pressures be counteracted by a positive attitude? An up-beat minister of finance is certainly of great value, but will his positive view of the future be taken-up by business?

If more people are willing to come to the party, then economic disaster can be averted! All it takes is a positive outlook.

Recession

Today the international stock markets collectively took quite a dive. Bears dominated the markets. Fears of a US led global recession are gripping the planet! Expectations are running rife of a full blown market recession. Perhaps a major stock market crash!

And all of this because a number of ‘highly intelligent’ investors invested without brains!

While on the subject of the sub-prime crisis, the simple fact is that it should never have happened! It defies logic. Why would anyone invest $1 million to something that is only worth $100,000? The only possible reason is a promise of disproportionate returns. Does anyone remember the dotcom boom – and crash? A simple case of widespread greed as investors chased easy money. If you haven’t seen the John Bird and John Fortune explanation, then click here to see it now. Hilarious but true.

Back to the impending recession.

John Smith is a rep for a large company. His first appointment for the week is with Samantha Froggins. Samantha usually places a substantial order from John. Today the order is for less. Much less.

"I'm being cautious" she says. "I heard that we’re going into recession. I don’t want to be saddled with dead stock. The reports are very worrying. I'm not sure that I've cut enough".

Not all of John's clients have cut back, but there are enough to cause concern.

At 4:00 p.m. John finally arrives at the BMW dealership. Fred is there to meet him. The papers are ready for John’s new 5 series BMW. The commission is substantial, and in anticipation Fred has booked a table at the exclusive La Vie en Rose.

Fred can't believe what he hears next. "Fred, we are moving into a recession. I have had three cancelled orders today and another five were reduced. I'm really sorry, but we'll have to put the car on hold. The Golf will have to do for another year."

Fred is devastated. If ever there was a done deal, this was it. He calls the restaurant and cancels his booking.

Soon La Vie en Rose will be laying-off staff. And so the cycle goes.

For a recession to happen, there have to be participants. No participates - no recession. As they say, markets, and the economy, are driven by sentiment.

Barry